Leases Flashcards
What is a lease
A lease is both an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations.
What makes a lease a binding contract
A lease is binding when each party accept the terms of the agreement and communicate their agreement to the other party. However, it’s always a good idea to have this in writing.
In what circumstances are tenants required to receive an “Information about Brokerage Services” form?
If the tenant is entering into a lease that is longer than a year or considering an option-to-buy, the tenant must receive the form.
What are some examples of how the Fair Housing Law restricts landlords?
It restricts:
How they are allowed to advertise a property
Questions they can ask on rental applications
The screening fee they charge a potential tenant
How they deal with their tenants
What does the term “leaseholder estate” refer to?
It refers to a lessee or tenant’s ownership of a temporary right to land or property.
How can an estate for years benefit both a tenant and a landlord?
Tenant often has a fixed in rent amount for the term of the lease.
Landlord has guaranteed rent for the term of the lease.
What is the main difference between estate for years and periodic tenancy?
Estate for years has a definite ending date and periodic tenancy does not
What is an estate at sufferance?
This estate is created when a tenant takes legal possession of the property but then remains on the property without the owner’s consent after the lease terminates.
Where can licensees obtain residential lease agreement forms?
The Texas Association of Realtors and the Texas Apartment Association each provides a residential real estate lease form for its members.
The Texas Real Estate Commission provides a Buyer’s Temporary Residential Lease and a Seller’s Temporary Residential Lease available to licensees.
What does the clause regarding security devices refer to in a lease agreement?
TexasProperty Code requires that landlords executing a lease agreements with a term over 90 days must change the locks from the previous tenant.
List three covenants that are common in a lease. (See screen 23 for other correct answers.)
Demising clause
Description of the premises
Clear statement of term
What does it mean if there are no limitations on the use of the property written into the lease?
If no limitations are written into the lease, the tenant may use the property for any lawful purpose, providing the tenant does not violate any deed restrictions
Define a gross lease
The tenant pays a fixed rent and the owner pays the taxes, insurance and other normal ownership expenses.
How is the increase in a graduated lease typically calculated?
By the increase in the property value based off an appraisal
When is a percentage lease commonly used?
In commercial agreements with shopping centers or retail stores.
How are residential leases different from commercial leases?
The terms are normally shorter than commercial leases
The clauses are fairly standard from one property to the next
The clauses are generally not negotiable
List three commons causes of a lease termination. (See screen 34 for other correct answers.)
Term expiration
Voluntary agreement
Property destruction
What are the most common causes of tenant default?
Tenant default occurs most commonly from failure to pay rent or maintain the premises.
What is the most common form of landlord default?
The most common form of landlord default is failure to provide services and maintain the property condition.
What happens to the lease if the tenant dies?
The lease does not terminate. It becomes part of the tenant’s estate, which is bound by the terms of the lease.
A lease is both
an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations
The legal essence of a valid lease is that it
conveys an exclusive right to use and occupy a property for a limited period of time in exchange for rent and the return of the property after the lease term is over.
In a lease arrangement
the owner is the landlord, or lessor, and the renter is the tenant, or lessee.
Several of the laws that apply to the sale of property also apply to leasing property. These include:
Statute of frauds Agency disclosure Lead Based Paint Sex Offender Laws Fair Housing Laws American Disabilities Act
There are four basic types of leasehold estates:
Estate for years
Estate from Period to Period
Estate at Will
Estate at Sufferance
Estate for years
has a definite beginning and ending date, does not require notice to terminate, and does not have automatic renewal.
Estate from period to period (periodic estate)
has no definite end date, typically run month-to-month, and requires proper notice to terminate.
Estate at will
has no time limit. The possession is given with permission, but there is no agreement about the rent. Either party can terminate at will, with proper notice.
Estate at Sufferance
is created when a tenant remains on the property without the owner’s consent after the lease terminates
Holdover Tenant
A tenant who doesn’t leave when the lease expires
The Law of Contracts governs the
making, interpretation, and enforcement of leases. Consequently, the requirements for making a valid lease are the same as for making a valid contract.
The covenants (agreements or promises) in the lease are very important and include:
Capacity to contract Demising clause Description of the premises Clear statement of term Specification of rent and how it is to be paid In writing Signatures Delivery
There are many different types of leases.
Gross Lease Net Lease Graduated Lease Ground/Land Lease Percentage Lease Proprietary Lease Index Lease
Gross Lease
requires the landlord to pay the property’s operating expenses, including utilities, repairs, and maintenance, while the tenant pays only rent.
Net Lease
the tenant pays not only the rent for occupancy, but also pays maintenance and operating expenses such as taxes, insurance, utilities and repairs.
Graduated Lease
the rent payments start at a fixed amount but increase as the lease term matures.
Ground/Land Lease
concerns the land portion of a real property. The owner grants the tenant a leasehold interest in the land only, in exchange for rent.
percentage lease
a lease whose rental is based on a percentage of the monthly or annual gross sales made on the site.
Proprietary lease
conveys a leasehold interest to an owner of a cooperative
Index Lease
provides for the adjustment of rent according to changes in a price index.
A lease may terminate for any of the following causes.
Term expiration Notice Voluntary agreement Property destruction Condemnation Foreclosure Breach of contract
Tenant default occurs most commonly from
failure to pay rent or maintain the premises. If a tenant is in default, the landlord may file a suit for possession, also called a suit for eviction.
The most common form of landlord default is failure
to provide services and maintain the property condition. In an instance where the landlord’s negligence or disruptive action has rendered the property unlivable, a tenant may vacate the premises and declare that the lease is cancelled by default. This action, called constructive eviction, can nullify the tenant’s lease obligations if the claim succeeds in court. In order to obtain a constructive eviction judgment, the tenant must vacate the premises.
If the landlord sells the property
the lease remains in effect and the new landlord is bound by its terms. If the landlord dies, the landlord’s estate remains bound to provide occupancy despite the landlord’s death.
If the tenant dies, the lease does not terminate
It becomes part of the tenant’s estate, which is bound by the terms of the lease.
